The Bank of Canada (BoC) maintained its benchmark interest rates unchanged at 0.25 percent on Wednesday, as widely expected.

In its policy statement, the Canadian central bank noted:

• Effective the week of April 26, weekly net purchases of Government of Canada bonds will be adjusted to target of CAD3 billion; this adjustment to amount of incremental stimulus being added each week reflects progress made in economic recovery;
• Outlook has improved for both global and Canadian economies;
• Canada’s Q1 growth appears considerably stronger than Bank’s January forecast, as households and companies adapted to the second wave and associated restrictions;
• BoC now forecasts real GDP growth of 6.5 percent in 2021 (versus +4.0 percent in January), moderating to around 3.75 percent in 2022 and 3.25 percent in 2023;
• Inflation is expected to rise temporarily to around the top of the 1-3 percent inflation-control range over the next few months; this is largely the result of base-year effects;
• CPI inflation is expected to ease back toward 2 percent over H2 of 2021 as these base-year effects diminish;
• Bank now projects global GDP to grow by just over 6.75 percent in 2021, about 4 percent in 2022, and almost 3.25 percent in 2023;
• Global recovery has lifted commodity prices, including oil, contributing to the strength of the Canadian dollar;
• We remain committed to holding policy interest rate at effective lower bound until economic slack is absorbed so that 2-percent inflation target is sustainably achieved; based on the Bank’s latest projection, this is now expected to happen some time in H2 of 2022;
• BoC is continuing its QE program to reinforce this commitment and keep interest rates low across the yield curve; decisions regarding further adjustments to the pace of net purchases will be guided by Governing Council’s ongoing assessment of strength and durability of the recovery;
• We will continue to provide the appropriate degree of monetary policy stimulus to support recovery and achieve inflation objective.